Evaluation of the New Homes Bonus

This report provide an overall evaluation of the New Homes Bonus in the first four years of its implementation.

In terms of the New Homes Bonus meeting its aim of providing a financial incentive to facilitate housing growth, there was evidence it had significant potential for doing so, in particular given almost half of all planning officers agreed the Bonus was a "powerful incentive". However, although there was evidence the policy was beginning to impact positively on attitudes such as support for new homes, the impact has been more limited in relation to plan making or planning decisions to date.

There were, however positive aspects in terms of the policy contributing to a more strategic and co-ordinated approach to housing provision, and the Bonus was seen as part of a number of factors and government measures that together were encouraging and supporting a more proactive approach to house building. This was set against evidence that wider public opposition to new homes had fallen substantially over the study period.

Since the positive financial impacts from the Bonus were seen to be proportionately higher than the negative impacts, this may suggest the fiscal incentive is likely to more readily incentivise and encourage higher growth authorities to increase growth further. Though the actual net financial impact for individual authorities and subsequent strength of the incentive will also depend on a number of other factors such as their financial position, original planning stance and the state and potential of the local housing market.

Although the external researchers found the policy was delivering to the key stated policy principles of being "powerful", "simple", "transparent" and "flexible", there were some questions raised around the extent to which the community was aware of the Bonus and what it was being spent on. Although the government had set out a clear funding approach for the first four years of the policy, looking forward there was less evidence the policy was fulfilling its "predictable" element, with some authorities sceptical as to the long term future of the policy.

Four years into the policy, there remains some way to go before it can reach its full potential to impact on attitudes and behaviours such as housing targets in Local Plans and subsequent planning decisions. This is partly because, as a non ring-fenced form of revenue, authorities have the freedom to spend receipts in ways that may be unrelated to specific development proposals.

The size of the Bonus fund and subsequent net financial impacts is expected to continue to increase over time. Awareness and understanding - not just of the Bonus, but of how it can be used to best effect - is also likely to continue to increase as the policy works its way through individual local authority plan making and subsequent planning decisions. As such, the financial incentive of the policy and the observed impacts to date on attitudes and behaviour are also likely to also continue to rise over time.

Date: 17/12/2014 Date of publication

Author: DCLG

DCP link: This item updates DCP section 4.64

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